Bioceres Crop Solutions (BIOX), which is headquartered in Rosario, Argentina, is an integrated, global provider of crop productivity solutions. The company recently announced a merger with Marrone Bio Innovations (MBII), which has the potential to accelerate its global reach, broaden product offerings and expand R&D programs. In addition, its subsidiary, Rizobacter, completed a $20 million public offering of series VII corporate bonds, which further fortifies its balance sheet.
Also, BIOX was granted import approval for its HB4 wheat flour by Brazil's regulatory authority, CTNBio, and so it estimates an incremental EBITDA contribution for HB4 Wheat of $15-20 million for its fiscal year 2024.
However, the inflationary pressures on production costs and supply chain constraints make the company’s near-term outlook uncertain.
Here is what could influence BIOX’s performance in the upcoming months:
Robust Financials
BIOX's revenue increased 90% year-over-year to $92.70 million in the second quarter, ended Dec. 31, 2021. Its gross profit grew 58% year-over-year to $23.70 million. Also, its adjusted EBITDA came in at $19.70 million, up 38% year-over-year.
Low Profitability
In terms of trailing-12-month CAPEX/Sales, BIOX’s 0.91% is 83.6% lower than the 5.58% industry average. Its 1.36% trailing-12-month net income margin is 84.3% lower than the 8.71% industry average. Furthermore, the stock’s trailing-12-month levered FCF margin is negative compared to the 5.89% industry average.
Stretched Valuation
In terms of forward EV/EBITDA, BIOX’s 12.26x is 56.5% higher than the 7.84x industry average. Likewise, its 2.56x forward EV/S is 49.5% higher than the 1.71x industry average. Furthermore, the stock’s 14.30x forward EV/EBIT is 25.6% higher than the 11.38x industry average.
POWR Ratings Do not Indicate Enough Upside
BIOX has an overall C rating, which equates to a Neutral in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. BIOX has a C grade for Value, which is in sync with its higher-than-industry valuation ratios.
The stock has a C grade for Quality, which is in sync with its lower-than-industry profitability ratios. In addition, BIOX has a C grade for Growth and Sentiment. This is justified because analysts expect its EPS to decline by 166.7% for the quarter ending March 31, 2022.
BIOX is ranked #17 out of 32 stocks in the C-rated Agriculture industry. Click here to access all of BIOX’s ratings.
Bottom Line
Even though BIOX reported impressive second-quarter earnings results, its near-term prospects seem uncertain because of high inflation and the supply chain crisis. So, the stock looks overvalued at the current price level, and we think it could be wise to wait for a better entry point in the stock.
How Does Bioceres Crop (BIOX) Stack Up Against its Peers?
While BIOX has an overall POWR Rating of C, one might want to consider investing in the following Agriculture stocks with an A (Strong Buy) rating: Golden Agri-Resources Ltd (GARPY), Nutrien Ltd. (NTR), and Archer Daniels Midland Co. (ADM).
BIOX shares were trading at $13.79 per share on Friday afternoon, down $0.05 (-0.36%). Year-to-date, BIOX has declined -2.48%, versus a -4.69% rise in the benchmark S&P 500 index during the same period.
About the Author: Nimesh Jaiswal
Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.
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